'Your $$$$$' Squabble: Experts Argue over 'Socialist' Bailout

Financial experts Peter Schiff and Stephen Leeb faced off on “Your $$$$$,” presenting opposing viewpoints about the looming bailout. Schiff attacked the bailout and “irresponsible monetary policy” while Leeb defended it saying the Treasury could profit.

CNN senior business correspondent Ali Velshi summed up Schiff’s position Sept. 27 saying, “Those of you who say that we should have a bailout or it should be or we should deal with this – are saying that it is socialist in nature, it is, it is anti-capitalist to intervene in the private markets, when the private markets fail.”

Velshi called the segment “possibly the debate you should have heard on television last night with two different people with different philosophies explaining what the good and bad of this is.”

Peter Schiff, president of Euro Pacific Capital, staunchly opposed the bailout and warned that it would make things much worse. He said government intervention in the markets was the problem and could not be the solution. Stephen Leeb, president of Leeb Capital Management and frequent “Your $$$$$” guest, supported the bailout and recited claims that the government could make money from the transaction.

Schiff said Americans borrowed and spent their way into bankruptcy, but by bailing out poor decisions “we’re setting a bigger fire.” He claimed to have predicted today’s financial instability in his 2007 book [1]“Crash Proof.”

“The economy is collapsing in exactly the way I wrote that it would. But also in that book I was afraid that the government would do exactly what they're doing now and this is worse. We're going die from the cure, not the disease,” Schiff said.

According to Leeb, “you can interfere.” He said that without a bailout the remaining financial companies, except Berkshire Hathaway, would wind up under government ownership.

He also “one-upped” Schiff, citing his own earlier book, [2]"The Coming Economic Collapse" which warned that “if housing prices ever declined it would make the tech bubble look like a picnic ... but we would have to get out of it” because it would weaken our standing with the rest of the world. Leeb noted “economic security” threats from nations like Russia and Iran if the U.S. economy remains weak.

“Our access to resources is gone … Two weeks ago, Russia, marches in to a prospective NATO country and takes it over and controls that oil pipeline,” Leeb said. “We've got to keep this economy as strong as we can for as long as we can so we can build alternative energy infrastructure.”

Leeb has passionately promoted alternative energy on “Your $$$$$” for months. On June 14, the economist warned that it would be [3]“game over” without a “very comprehensive energy plan.” In another interview May 8, Leeb said [4]“We have to be prepared to spend trillions of dollars” on “50 or 100 Manhattan projects” for alternative energy.

In the Sept. 27 CNN broadcast, Schiff spoke out against printing more money and buying up debt. “All the government can do is create inflation. They don’t have any money. They’re going to print it,” Schiff warned. Later in the program, Schiff made the point again: “We can’t solve them [economic problems] with a printing press. Go to Zimbabwe and see how well it works.”

Leeb protested the comparison between Bush’s plan and Robert Mugabe’s, saying the two men are “a little bit different.”

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